WASHINGTON, May 10, 2012 – It doesn’t take much to give Wall Street’s currently lonely bulls a ray of hope. Jobless claims were down by a huge 1,000 souls over last week’s official count—a whopping 2,000 less than “expected” by economists. (Can you guess we’re being a bit ironic here?) So forget that Greek contagion. Come out, come out, wherever you are. Dow futures are pointing up a moderately impressive 36 points as this is being written.
Speaking of Greece, lefty leader Alexis Tsipras (whose name we scandalously misspelled yesterday) announced that for sure he couldn’t form a new government after the head of the New Democrats, Antonis Samaras, had failed in the first attempt. Next up at the plate: Socialist head Evangelos Venizelos. Hint: He won’t have very good luck either.
CNBC reports that “most Greeks” oppose the austerity measures imposed on that country by the European union. Yet they still want to stay in the Euro. As we reported yesterday, what the Greeks really seem to want is for the Germans to pay their bills ad infinitum so they can get back to their profligate ways without ever having to pick up the tab. It’s called having your cake and eating it, too.
Problem is, for some reason, the Germans don’t want to play. They don’t cotton to this idea of using up their savings so that others may indulge in sun-splashed Mediterranean lifestyles at their expense. So, as a result of the Greek impasse, part of the latest bailout money, due Greece today (Thursday) has been withheld as an expression of the union’s monetary displeasure. Lotta good that will do. Do we smell a resurrection of the drachma just around the bend?
CNBC quotes one Athens woman as saying, “People voted with anger, not with reason…. Tsipras lives in his own world. God help us, what is this? I’m afraid we will be kicked out of the euro and he thinks he is our savior?” Right thought, but it hardly seems to capture the, er, zeitgeist.
We actually have some sympathy for the Greeks here. As in this country, the politicians have lied so often and so long to their constituents that the concepts of bill paying and tax paying have become almost entirely disconnected from reality. Many are outraged, particularly at the Germans, for daring to take the fictional punch bowl away from the party.
The draconian, German inspired European solution for all this mess (already being endured in Ireland) is to essentially go cold turkey for as many years as it takes to pay down the debt and restore a real, functional economy. That would work. Problem is, it would take at least the next generation living in complete and utter misery to accomplish this along with, say, a 25% unemployment rates for maybe a decade. People are unlikely to go along with this for as long as it takes. Would you?
The real problem with this entire situation is that no one has addressed the real gorilla in the room. Genuine growth (as opposed to string saving) could considerably relieve the negative effects of austerity, plus, provide even more money to pay down those bills.
It’s something we’ve forgotten, too, in the U.S. Here, while banks have largely been restored to health and where Wall Street fat cats continue to collect the bonuses they’ve never earned, the vast industrial and agricultural middle of the country continues to wallow in misery because their issues have never really been addressed.
Little guys can’t realistically get loans for homes and small businesses because loaning to Donald Trump is, oddly, seen as less of a risk. And what little “stimulus” money actually went out to the people from the Feds was actually paid out to public employee unions to insulate their own workers from what the rest of the taxpayers—their “bosses”—were suffering. Which means that money was wasted for no effect.
In many ways, President Obama and Alexis Tsipras are two peas in a pod. There’s a lesson for us here in this. But many in the U.S., particularly the Democrats, aren’t very quick studies. The bills are way overdue and someone has to pay them, or we get to have an instant replay of the Dark Ages in the West.
Where are those 300 Spartans when we need them? The prospect of being enslaved by Xerxes way back when was about as appealing as the prospect of being enslaved by unrepresentative governments today. Leonidas and the Spartans decided to fight the Persians off. Looks like only Paul Ryan is attempting to stave off the forces of evil today. We’re not sure our one metaphorical Spartan can fight off the DC-NYC combine without a few reinforcements.
But hey, that battle can be put off again until after this election and the next one and the next one. As for today, those unemployment claims are way, way down as we’ve already noted, so it’s time to party, at least at Wall Street’s 9:30 a.m. opening bell.
Meanwhile, the Greeks are providing a nasty metaphor for what’s about to happen to us if Paul Ryan can’t find at least 299 more stalwart allies to hold our economic pass.
As for this morning, if you have profitable positions, particularly in industrial companies, now might be a good time to sell into the updraft, as another downdraft should follow shortly. It’s best to have no regrets. Today may give you that chance.
(Usual trading disclaimers are in force.)
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